Welcome to another special episode of our Capital Ideas podcast, "The Power of Advice." Here, we have conversations with leaders from different industries, how they built brands, reinvented careers, and the lessons they learned along their journey. Today, I'm joined by Brian Niccol, the CEO of Starbucks. Brian's helped some of the world's most recognized brands, like Taco Bell, Chipotle, and now Starbucks, navigate periods of change by focusing on what customers value most and by staying true to the core business. Brian, great to have you. Welcome to "The Power of Advice."
Yeah, great to be here. Thanks for having me.
And by the way, thank you for the pumpkin spice latte. It was my first one, and I can see why it's a bit of a cult thing.
Well, I'm glad we finally got you on the PSL train, so welcome aboard.
I'll tell you, I did do a little primary research, and it appears, in the last 20 years, you guys have sold maybe a half a billion of them. So, it doesn't seem like a unique idea for people, they love it.
No. Actually, I'm surprised you haven't had one, so...
So, I did my job. I feel like this is well worth my time.
All right, let's get going. Let's start in the early years. Let's go pre-Starbucks. You're in school, and you major in engineering and you become more interested in marketing consumer behavior. How did that all start off? How'd that happen?
Yeah, I mean, look, this is what's great about college, I think, right? You kind of start going down one path. You know, my dad, he was a chemistry major and was like, "Technical degree, technical degree."
And I was always pretty good at math, so I was like, "Okay." And then I got to college and I started taking some classes outside of the engineering school. And I took a business class around marketing, and I was like, oh, this is how you can influence people and why people become brand loyal and excited about brands. And I kind of started to put these two things together. And luckily I had some great professors that, when I was asking more about it, they kind of pointed me in the direction of like a Procter & Gamble and consulting firms. And then, fortunately, I got a summer internship working at Procter & Gamble, and, you know, the rest...
There it goes.
Yeah, so Procter & Gamble, you started off there. When you think about that early Brian, what was it that you were learning that you use today?
Well, you know, and this is why I always consider myself really lucky, and frankly really grateful, because my first kind of experience in the corporate world or a big company was at P&G, and I happened to have a boss or a manager that it was clear he was willing to invest time with me.
Because I really didn't know what I didn't know. And I always recommend to people whenever they ask me, "Hey, what do you recommend for your first job?" I was like, "Look, find a job where they're going to reward the idea of being curious and wanting to be inquisitive and you're thirsting for learning. Because if you can find a manager that embraces that, you'll learn a lot."
It's a game changer when you find that person.
Yeah, exactly. And so, I feel really lucky because that's really what those 12 or 14 weeks were all about for me, is just learning. I learned how to, frankly, write an effective email. I learned how to write an effective memo. I sharpened communication. At first I was writing, like, academic papers, and what I quickly realized is, well, that's not what this is about. P&G has a very clear approach, which was: give me the conclusion, give me the three points and tell me the conclusion again. And it was kind of a one-page culture. Like, if you can't get it on one page, your thinking hasn't been synthesized enough.
Wow. I love that. We got to do more of that here. I love that.
Yeah, so that was kind of like one of the biggest things I've always taken with me. I think it served me well, to figure out, like, okay, look, these are complex issues or challenges, but how do you boil it down to, what are the two or three things that are driving the decision or where do you need to learn more?
It's such a great lesson for all of us who are engaged in these summer programs to make them meaningful for the people who are there. By the way, do you still use Scope mouthwash? Because I know you were involved in the brand.
That's good, you did your research.
So, that was my summer internship, and the first brand I worked on was Scope. And I must admit, before I started working at P&G, I was not a mouthwash user, but now I'm a lifelong customer. So, yeah, I'll never give up on Scope.
All right, so you talked about brand. Let's get to the core of a brand. Pizza Hut, Taco Bell, Chipotle, Starbucks. Everyone in the world knows these brands. And what you've done is you help reconnect people and customers with a brand they already love. They may have loved it for a reason, fallen out of love a little bit, and you bring them back. Talk about brand loyalty. How do you drive brand loyalty?
Yeah, look, this is another one of those facts where these iconic brands that really do have a special place in culture and then in consumers' or customers' hearts and minds. I've had the luxury of being able to work on them. But you had to figure out what is the thing that gets people excited? What makes them want to love their brand? What makes them want to have this brand be a badge? And all of those brands that you just mentioned, and most recently, obviously, Starbucks, has that to it. And when you understand what is it that drives that connection, you have to figure out how you grab it and then how you continue to bring it forward in a way where people understand, that's right for me and that's right for today. Because I think sometimes what happens is brands just age with a certain group that they connected with 20 years ago and then they just age with them, as opposed to, no, no, there's a nugget of this that resonates regardless of age, and you got to keep your brand youthful and in front of culture. And so, that's really what I've done across all these businesses.
But it sounds like it's intentionality. I mean, it...
100%. I have this saying at Starbucks, make no mistake, Back to Starbucks is an intentional strategy. Everything that we're doing is intentional. There's a reason why I think it's important to write on the cups. There's a reason why I think it's important to have great seats. There's a reason why we're doing pumpkin spice latte for the 22nd, 23rd year in a row. It's intentional, and you have to care about those details because they make the experience.
Well, and you talk about that experience. It is amazing when you have a brand that when people say, "I see that, that reminds me it's fall."
I mean, how that happened. And even the cups at Christmas time, it just reminds people the season has changed. It's not that they don't know, but when you can become synonymous with it, it's pretty spectacular.
It's pretty remarkable. And the thing that I will say, one of the things that I learned at P&G was kind of the consumer mindset. And then when I moved into my time at Yum!, I finally understood like, oh, now I also own the experience. And that's kind of what you're getting at is, the thing that is so magical about Starbucks is the experience that Starbucks owns, this idea of human connection, having this connection with seasons. There's just such an emotional feeling to that. I'm always amazed. It was August 25 when we launched it, and the number of social media posts where I saw people wearing sweaters and just...
They're all in. They're all into it.
It doesn't matter that it's 90 degrees in LA, I'm wearing a sweater today because I have my pumpkin spice latte. And you don't get that unless you have an experience, a feeling, that just goes really deep.
So, you've taken on these new roles, whether it was Chipotle or Starbucks. How do you get a sense for the state of play when you're getting in there?
Well, so, I'll give you the example on Starbucks. I had like a month to two months between my Chipotle role and starting my Starbucks role. And I always believe the most important thing you can do right out of the gate is understand the customers' perspective and, in this case, the partners' perspective, which, that's how we refer to our employees, partners. And so, I really took that first month to do just that. At first, the good news is nobody knew I was the Starbucks CEO, and so I could show up, and I purposely did this...
Undercover learner is what I would say.
Yeah, undercover learner.
I wasn't anybody's boss yet, I hadn't started. So I was just there purely to learn, observe. I had always been a customer, but, you know, when you're a customer, I didn't even realize how I had drifted away from my Starbucks experience if I go back when I first experienced the brand to how I was using the brand today. And I had drifted to be more of a transactional customer, and it didn't even dawn on me. And this is what happens, I think, to brands. It happens kind of just slowly, where you don't even realize you've changed your behavior or your feelings. So, you know, I went into a Starbucks, and I was like, "Wait a second, where are all the seats?"
You know? Like, what happened to the community feeling? Where's that barista-customer connection? It had become very transactional. And I myself was guilty of participating with the brand in a very transactional way. So, I spent that month, I made sure I was going at an opening, early in the morning, weekdays, weekends. I wanted to see a closing. I wanted to see what happened in the middle of the day. And I was doing all this as a customer. And I went to various stores.
And when you walked into those stores, still, at this point, people didn't know who you were.
No, but, you know, there were a couple places where I realized, I think...
I think they know, but it was one of those kind of awkward moments where it's like, do I want to say anything? And how's this supposed to work? And then finally, I remember one of the baristas was like, "You know, you look a lot like our new CEO."
And you got to come clean.
And I was like, "Okay, yeah, that's me." But I was like...
But you were experiencing it firsthand, I mean, that's the first thing, is experiencing firsthand.
That was the first thing. And then once it was, I was like, okay, I've got a pretty good feel of what's happening for our customer. And I would talk to customers as we're in there. You know, I wanted to see what was happening for our partners. And I started spending some time with our partners that were kind of leadership as well as in the store here. And Rose and Tunji and Manny, they gave me the insight on what it was like to be managing stores and running stores. And so, by the time I got to the job, I felt like I understood what the situation was and where we had drifted and, frankly, what we needed to get back.
And then you talk, and I've heard you talk about this coffeehouse walk. So, it's not just you, it's other folks who are partners at Starbucks exhibiting what you did. Is that so everyone tries to have the same lens of how other customers are experiencing it?
Well, this is to your point earlier, we have to be intentional. When you visit a coffeehouse as a leader, whether you're a district manager, an RD, the CEO, the COO, we should all be entering the coffeehouse with an intentional reason on that visit. And what that coffeehouse walk does is it just makes the visit very intentional. It's experience the front of house, what's happening for our customers. Then you got to experience, and as we say, once you get behind the counter, apron on, so then you experience what's happening behind the counter. We make sure the machines are calibrated correctly. Is the espresso machine pulling excellent shots? Is the back of house organized correctly? Are our tickets resolved? So, if there was any maintenance issues, are they getting resolved? And then also just, is the store staffed and is it scheduled correctly? So, if you can walk in and be intentional with why you're going to spend these 20 or 30 minutes in the store, it actually makes everybody better. And the baristas appreciate it because now they understand, hey, what's the coaching I'm going to get? And it also presents an opportunity for them to give feedback of what's not working. And it gives us kind of like a vocabulary of, all right, we're in front of house, let's have a conversation here. We're back of house, let's have a conversation here. We're on equipment, let's have a conversation here. We're on service, let's have a conversation here. And everything just becomes intentional. So, that's what the coffeehouse walk is all about.
But it makes so much sense. You're getting out of the ivory tower and you're getting into the business and how it operates every single day. In our business, I love going to see financial advisors.
And just chatting with them about their connection with their clients and how their job is going and how it's evolving and what are the kinds of things they need. You can learn a lot more in that setting than on the 18th Teams meeting that's 30 minutes inside the office.
I say this all the time, we will not successfully run Starbucks from a spreadsheet.
So, it's a culture of people and it's a culture of service and it's a culture of kindness. So, if you're going to see those things in action, you actually have to be where it occurs, and that is in our coffeehouses.
It's also a culture of innovation, right? And you like to innovate. So, there's good and bad about innovation.
Sometimes it powers the company ahead and it strengthens a brand, and sometimes it distracts from it. How do you think about that? Is it a test and learn? I mean, how do you think about that?
Well, yeah, I was going to say, look, that is exactly the tension that you're always managing, because you want to stay relevant, but you don't want to pull yourself so far away from what the core business needs to be that it becomes distracting. And look, this is why I really believe in the idea of iterating and also learning along the way. And so, one of the things we instituted at Starbucks is, we call it the Starting Five. So, we have 18,000 coffeehouses in the United States. Look, let's get the idea from PowerPoint or a Word document actually into some stores and let's see what happens. Does it mess up how we execute great espresso drinks? Does it mess up our customer service experience? Or does it add to it? Is it easy to execute? Are customers kind of leaning back towards it? Are they excited about what they're experiencing? And, you know, it's been really powerful for us.
Yeah, you make it real, and you know what? There have been things that we put into the Starting Five that I was like, "Oh, that's going to work," and then it doesn't work. And that's okay.
And the place to learn is in five stores and not all 18,000.
And the thing that's great about that is if we're a learning culture, we figure out how to iterate from that to get better on what the next version is that we're going to do.
You also have to know what is your core business, so that when you're innovating, you're innovating from the core. People aren't going to look at it and go, "What are you doing that for?" You know, when we did these protein lattes, it was a great example of we fine-tuned the execution through the five-store test so that it became very easy for our partners to execute. And the feedback we got from customers was, "Look, I'm already doing this." People were bringing in their own protein powder.
They were mixing live time.
They'd order an espresso or a macchiato or a latte, and then they add their own protein powder after the fact and stir it up, so, good, but could be great. And if we do it behind the counter, it'll be great. And that's ultimately what we got to.
You used the word partner a couple times.
It's obviously an important term. Has it always been the term? Is it a new term? And why is it important?
Well, so this is really to Howard's credit in how he wanted Starbucks to be a different kind of company, which is he wants everybody to be truly an owner and a partner in Starbucks' success. And so, he made a commitment, geez, I think maybe 30, 40 years ago, where every person in our company gets stock in the company. So, you have equity, and it's called Bean Stock. And with that, became the term, hey, now everybody's officially a partner. And one of the things I will tell you that's really special about Starbucks that I learned as I got there is people will sign off emails, "Proud to be your partner." It is not just a thing you hear us talk about externally. It is truly like a thread in the culture of...
Yeah, we're all owners, and we're all responsible to grow this company and provide an experience for our customers. And so, yes, they're connected via equity, but they're also connected, I think, through culture. And the fact that everybody's proud to be a partner is really important.
Yeah, it speaks a lot about the culture. You have, in your history, put together great leadership teams. Our folks who analyze and own the companies that you've worked at say that about you, so take some pride in that.
That's nice to hear, yeah.
But how do you, when you're putting together those teams, how do you assess or what are you looking for in a strong leader?
Look, I have been really fortunate because we do have great leaders, and I think at Starbucks we've got one of the best teams you could find. And what I look for in people is I want them to share this passion for learning, this passion for curiosity. I think that's a starting point. I also like leaders that have a high level of empathy and humility. We're in the service business. If it becomes about you and not about this greater purpose, it's probably going to be incongruent. And it won't work. So, obviously, I should start with everybody's smart, everybody's got high integrity, everybody's willing to collaborate and use tools, but I think they got to have that thirst for just learning and curiosity and this element of empathy and this idea of humility, where it's like, look, we're working towards building something special, and if I can support you, I'm going to support you. And if you can support me, support me.
Yeah, and bring that, then, back to the customer experience, right? Because great customer experiences start with great employee experiences or great partner experiences, in your case.
That all, at the end of the day, mixes.
Yeah, and I think Starbucks has always believed this, because if you were walking in our office, we have this one area where we have two chairs, and it's supposed to symbolize, in every meeting, those two seats are always filled by two people, customer and a partner. And the point of that is, in every decision, it should be customer-focused and then we should understand how the partner can actually execute and what the implication is from that decision.
Customer's always in the room.
Customer's always in the room, and our barista or partner that's in the store is always in the room. So, we always have to have those two voices driving the decisions that are happening. And those are the kind of leaders I want, where they're looking for what is the customer point of view, what is the partner point of view. And then they also have to have a deep understanding of what's this brand all about.
Yeah, it makes so much sense. At Capital, one of our core values is client focus. And if you have that client voice in the room all the time, even if they're not there but you're bringing the voice into the room, it makes you make better decisions.
For sure. Okay, Back to Starbucks was built on three simple ingredients. What are they?
Well, you know, look, it is, frankly, got to have great customer experiences. Obviously, we got to have great coffee. We got to have great partner experiences. And when we have great product with great partner experiences and great customer experiences...
Everything works. And, you know, that's really what Back to Starbucks is all about. And if you listen to the first couple, I guess, months when I was in the job, I was genuinely just excited about what was possible, because, to me, these things seemed so much just fastballs for what Starbucks should be doing.
It's blocking and tackling. We should have the most meaningful third place. We should have the most connected, community-centric coffeehouse. You should walk in there and be like, I'm going to date myself, but it's an element of like "Cheers," right?
It's like you walk in and this is your coffeehouse.
Everybody knows your name.
Everybody knows your name. The barista and you have a connection as well as the other customers that are in there. So, just getting back to being Starbucks, just, I was like, man, I couldn't wait to get going.
So, you say third place, and when I heard that term, I was laughing, because I was thinking, wouldn't first or second be better? But it has a different notion. I don't think everyone knows that.
Oh, okay, okay. Yeah, yeah. So, obviously there's your home and work, and then this is the third place that you would go and spend time. And Starbucks really was the first company or idea to do this. And if you go back and look through history, there's always a third place. Maybe it's the Spanish Steps in Rome, maybe it's Trafalgar Square in London, but there have always been these places where people come together with other people and share community. And, I think, in some cases, it's more important now than ever. And that's also one of the key insights we had here, is, as the world gets more automated and digitized, I think these human moments are going to become more and more scarce and more and more important. And I think we can fill that role.
Your business is all about that customer experience, the human connection, but I have to ask the AI question.
